The last thing we need IMHO is a centrally issued fiat currency - which Keynes was proposing with his Bancor - and all the institutionalised baggage and politics that goes with it.

From a comment in The Agonist: The Morality of Deliberate Defaults

The answer lay in the terrible depression in the early 1890s when so many banks failed. Second, a national currency did not fully exist, and banks issued their own currency that traded on something similar to an exchange market. The First National City Bank of New York was well known and highly trusted, so its notes traded in the major cities at 100 cents/dollar. Smaller banks traded at discounts. Third, there was no Federal Reserve or government intervention to help banks. If your bank made too many bad loans, it was wiped out. One of the features of 19th century novels in Britain and the U.S. was the periodic impoverishment of the hero or heroine when all their assets held in a "trusted" bank were brought to zero because the bank failed. This was a very common occurrence and made it incumbent on the individual to research very thoroughly the creditworthiness of a bank which held their deposits.